How Do Tech Companies Make Money? Visualizing Tech Giants Business Models In 2022

In the last years, I had the chance to devote most of my waking hours to think about a big issue for any business: distribution.

The way a company structures its operations become vital to its long-term ability to create value. In fact, the business model is an essential part of any business.

Often, especially in the start-up world, there is the belief that a great product or service is all you need. However, that is not the case.

In fact, the tech giants listed in this article all mastered distribution. There is no doubt that each of them has excellent products and offer incredible services.

However, without a proper distribution strategy, their success wouldn’t have been possible.

Apple: It’s still all about the iPhone

Apple’s business model is based on the sales of products. It is undeniable that the value of those products is based on Apple’s ability to create a friendly environment for its products.

Apple sold over $191 billion worth of iPhones in 2021! 

As of 2021, the iPhone still represents over 52% of the total sales.

Microsoft: The octopus of tech!

Founded in 1975 Microsoft has survived a few tech bubbles and thrived. In fact, as of the time of this writing, Microsoft is still one of the most valued companies, with a market capitalization of over seven hundred billion dollars.

That is also because the company has been able to use the excess cash it generated in the last decades to acquire new ventures.

In fact, when Microsoft sniffs a trend, it goes all in. For instance, in 2016 Microsoft bought LinkedIn to enter the professional network space.

Microsoft is also in the search and advertising industry with Bing. In short, Microsoft has been able to use its cash cow, the Microsoft Office System to diversify its business model.

Today Microsoft is quite diversified and it comprises platforms, like LinkedIn.

In 2021, Microsoft generated over $168 billion in revenues, with server products and cloud services passing for the first time office products. 

Amazon: The everything store

Amazon is one of the most disruptive tech companies. It started as an online bookstore to become the everything store; even though most of its revenues come from its store.

There is a growing part of the business that relies on seller services, subscription services (Prime), and cloud-based services (AWS). Therefore, Amazon too has a diversified business model.

It is highly probable that the part of the business related to seller services, subscriptions, and cloud-based services will be the most critical part of the company also from the revenue generation standpoint.

Although the cloud services represent a small part of the business as of now. What started as a “side project” might be the most important business segment in the coming years.

Google:  The tech giant that became the web

Google’s business model is based mainly on advertising. Even though the company has placed some bets on products that are not related to its main business model.

Even though Google was a latecomer in the search engine industry, it took it over with the algorithm that changed the web: PageRank.

As of 2021 81% of the revenues come from the advertising networks of Google. In fact, advertising generates over $209 billion dollars in revenues; no doubt that is the cash cow for Google.

It is also true that the company is growing other revenue streams (such as Apps, Google Cloud, and Hardware).

Those sources will grow more and more in the future as Google will rely less on advertising. Google’s business model, and ability to create value for several key players – I argue – is the key ingredient to its success.

Facebook: The social network

Facebook has been able to tap into the value of its billion users. Facebook’s business model is based on advertising.

In fact, as of 2021 over 97% of its revenues came from advertising.

Throughout the 2020s, Facebook went thru a few turmoils. The latest, which posed a threat to its whole business model, was the Apple privacy change policy, which made Facebook advertising machine way less effective. 

This forced Facebook to transition into Meta. A rebrand that was completed in 2022. 

Handpicked case studies from the site: 

• Amazon Business Model
• Netflix Business Model 
• LinkedIn Business Model
• Google Business Model
• Apple Business Model
• Microsoft Business Model
• Baidu Business Model
• Facebook Business Model
• YouTube Business Model

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